Chapter 21 Review

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If Area I​ = 1,700 and Area J​ = 3,300, what is the Gini​ coefficient?

.34 (I/I+J)

The middle​ 20% of the population earn​ ________ of total income.

16% (32-16)

Income inequality in the United States has increased in part due to globalization. How does globalization contribute to income​ inequality?

It allows domestic firms to hire low −skilled workers anywhere in the​ world, putting U.S. workers in competition with foreign workers. This has caused the wages of low −skilled workers to fall relative to the wages of other workers.

Income inequality in the United States has increased in part due to technological change. How does technological change contribute to income​ inequality?

It has created many higher −income jobs for skilled and trained​ workers, leaving the income of less −skilled workers relatively unchanged by comparison.

When we compare shares of income earned by U.S. households over the past 40​ years, which of the following statements about the distribution of income is​ true?

The largest gain in income percentage is in the top​ 5% of households.

Lorenz curve

a curve that plots, for any given percentage of the pop, the proportion of total income earned by that particular group of people

income mobility

ability to move to a different part of the income distribution

diminishing marginal utility

belief that having more of something makes you happier but in successively smaller increments

The belief that having more of something makes you happier but in successively smaller increments is called

diminishing marginal utility

Income distribution in the United States over the past 40 years has become more equal

fa;se

The results of a survey conducted by Dan Ariely and Michael Norton found that Americans

have a preference for much greater equality in wealth distribution than currently exists

median income

income of middle person in an income distribution

If growing income inequality results from changes in technology​ that, as a​ whole, make society better​ off, this will

increase the size of economic pie

globalization

increasing integration of the world's economies

The question​ "Is the U.S tax system disproportionate​ enough?" is a​ ________ question, and the question​ "How would higher taxes make the rich​ behave?" is a​ ________ question.

normative;positive

Gini coefficient

number that measures a society's income inequality, based on how income is distributed across quintiles. The Gini coefficient is derived from the Lorenz curve and ranges from 0 (perfect equality) to 1 (perfect inequality)

Rachel, a large pineapple producer in​ Hawaii, lobbies Congress to limit imports of pineapples in order to be able to sell her pineapples at a higher price and greatly increase her income. This possible source of income inequality is due to

rent seeking

income distribution

share of income received by different groups

From 1970 to​ 2012, the Gini coefficient in the United States has

steadily increased

utilitarianism

the belief that the ethically proper thing to do in any situation is the thing that maximizes society's overall happiness and minimizes society's overall suffering

If​ Martha's income doubled to​ $220,000 while the incomes of the other four residents did not​ change, what would happen to the original median income on​ Richlandia?

would not change

In the United​ States, the highest quintile of income earners contribute​ ________ of all federal tax dollars​ received, and the lowest quintile of income earners contribute​ ________ of all federal tax dollars received

​68.8%; 0.4%


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